What the Holidays Mean to Best Buy

New management at Best Buy Co. Inc. (NYSE: BBY) has not articulated a turnaround plan, and that may be because there is none. The people who run the consumer electronics retailer cannot conjure what probably does not exist. That leaves the best chance for Best Buy shares to advance from their current level of $17 in the hands of founder and ex-chairman Richard Schulze. Reuters reports that he and several private equity groups continue to look at the Best Buy financial statements ahead of what could be a bid of between $24 and $26 a share. But it is not the company's past numbers that should be the focus of Schulze's attention. It should be how well the retailer will do in the critical final three months of the year - the holiday season.

These firms all are run by brilliant people who employ expert analysts, but the history of risky private equity deals is littered with transactions based on projections that were too optimistic.

Best Buy's holiday sales can be measured against current forecasts for the entire retail industry. The NRF expects retail sales nationwide to rise 4.1% this holiday season to $586.1 billion. Shop.org predicts that e-commerce sales will rise "12 percent over last holiday season to as much as $96 billion." As much as anything else, Best Buy's weakness has been online. It has been trounced by other e-commerce firms, particularly Amazon.com Inc. (NASDAQ: AMZN). And there is nothing Best Buy can do about the new consumer habit of looking at items in stores to evaluate them in person, and then buying those items online to get the best prices.

Schulze is likely to take his time pouring over Best Buy's books so that he can get a clear picture of sales between October and the end of the year. If those numbers are as weak as recent results would indicate, he may not make any offer at all.